Signs of Life for Ex-Im?

Last night the House of Representatives voted on a rare discharge petition, under which a controversial bill can skip the usual committee process and go straight to a floor vote. In this case, the discharged bill is Rep. Stephen Fincher’s Export-Import Bank revival bill. It passed, 246-177, with 62 Republicans joining nearly all Democrats. It was the first successful discharge petition since the McCain-Feingold campaign finance regulation bill. For more on discharge petitions, see my earlier post.

So what happens now? On Tuesday, the House will hold further procedural votes on the Ex-Im bill, which will almost certainly pass. Then it’s off to the Senate, which is unlikely to act on the bill.

So crisis averted? Not quite. Because Senate Majority Leader Mitch McConnell is unlikely to allow a vote on the Fincher bill, reauthorization will instead likely be folded into a must-pass transportation bill. So while Fincher’s discharge petition will likely amount to nothing, it does give Ex-Im beneficiaries a backup plan if they have trouble getting Ex-Im reauthorization into the transportation bill.

For more on why Ex-Im is bad policy, bad politics, and bad economics, see my paper.

Finally, for all the sky-is-falling hyperbole coming from Ex-Im beneficiaries, regular readers will remember that Boeing alone receives nearly half of Ex-Im’s business. Despite Ex-Im’s closure, they recently announced that their earnings were up 25 percent in the third quarter. More than 98 percent of U.S. exports happen without Ex-Im assistance. As with many other companies, Boeing will be just fine without Ex-Im and corruption it enables.

CEI’s Battered Business Bureau: The Week in Regulation

A normal week ended with a bang, with more than 450 pages of EPA regulations swelling Friday’s Federal Register to more than 800 pages (normal is around 300). New rules cover everything from power plants to cotton.

On to the data:

  • Last week, 80 new final regulations were published in the Federal Register, after 63 the previous week.
  • That’s the equivalent of a new regulation every two hours and 6 minutes.
  • So far in 2015, 2,754 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,359 new regulations this year, far fewer than the usual total of 3,500-plus.
  • Last week, 2,048 new pages were added to the Federal Register, after 1,796 pages the previous week.
  • Currently at 65,119 pages, the 2015 Federal Register is on pace for 79,414 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 23 such rules have been published so far this year, one in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations ranges from $3.13 billion to $4.38 billion for the current year.
  • 230 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 445 new rules affect small businesses; 62 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Ethics and Rent-Seeking

Nice writeup of Fred Smith’s and my recent paper at Business Ethics Highlights.

Virtuous Capitalism, or, Why So Little Rent-Seeking?

The venerable Fred Smith and I have a new paper out today. Click here to read it. In the paper, we try to solve the Tullock Paradox, named for the late, great economist Gordon Tullock (my remembrance of him is here).

What is the Tullock Paradox? It involves rent-seeking, or seeking special favors from the government. Bailouts, subsidies, and regulations that prevent competition are all examples of rent-seeking. To provide some context, lobbying is roughly a $3.5 billion industry, and the federal government doles out more than $100 billion in corporate welfare—meaning rent-seeking is potentially a 30-fold investment. Not 30 percent, 30-fold. Meanwhile, the Dow Jones averages an 8 percent return. With such outlandish returns on investment, the Tullock Paradox is: why so little rent-seeking?

Tullock had his answers, rooted in economic reasoning, which we summarize in the paper. But while Tullock’s theories are valid, they’re missing something: ethics, virtue, and a full picture of humanity. Most economists stick to analyzing a Homo economicus character who is unfailingly rational and utility-maximizing. This is a useful and interesting species to study, but Fred’s and my goal is to encourage economists to study Homo sapiens as well. We are capable of pride and shame, we want to love and be loved, we aren’t always 100 percent consistent, and we make mistakes all the time.

One reason there is so little rent-seeking is that most (but not all!) businessmen and entrepreneurs have a sense of virtue and honor that prevents them from seeking special favors. It is much more satisfying to make an honest living than a dishonest one. This sort of thing is difficult to quantify, but it is real, and economists should allow virtue to exist in their models.

Moreover, economists’ single-minded focus on sin means they’re only doing half their job. They should also praise and encourage virtuous behavior when they see it. Praise where due, not just criticism where due. Just as rent-seekers deserve opprobrium, honest entrepreneurs deserve to be admired and emulated. Maybe if virtuous capitalists had higher social standing, there would be more of them.

Over the next week or two, we’ll be putting up a series of short posts explaining Tullock’s “Big Four” theories for why there is so much less rent-seeking than one would expect. Besides providing a rent-seeking primer for those who don’t have time to read our entire paper, we’ll also delve into our larger project of encouraging economists to study Homo sapiens as well as Homo economicus, and to acknowledge virtue as well as sin.

Read our paper here.

CEI’s Battered Business Bureau: The Week in Regulation

It was a short work week for the federal government due to the Columbus Day holiday. But agencies still found the time to publish new regulations ranging from livestock herding to washing machines.

On to the data:

  • Last week, 63 new final regulations were published in the Federal Register, after 68 the previous week.
  • That’s the equivalent of a new regulation every two hours and 40 minutes.
  • So far in 2015, 2,674 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,343 new regulations this year, far fewer than the usual total of 3,500-plus.
  • Last week, 1,796 new pages were added to the Federal Register, after 1,245 pages the previous week.
  • Currently at 62,981 pages, the 2015 Federal Register is on pace for 78,043 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 22 such rules have been published so far this year, one in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations ranges from $1.73 billion to $1.88 billion for the current year.
  • 223 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 435 new rules affect small businesses; 61 of them are classified as significant.

Highlights from selected final rules published last week:

  • The Health and Human Services Department issued a new 159-page economically significant rule for medical records (would it be cheaper for them to just ask the NSA for their medical record information?). I am scoring this rule at its estimated cost during 2015 of between $39.07 million and 64.08 million. Its annual costs are estimated to exceed $100 million in each of the next two years, hence its economically significant classification. I am not including future years’ costs in our running compliance cost tally.
  • Corrections to the Energy Department’s recent washing machine energy-efficiency testing rules.
  • Automatic emergency brakes for trucks may eventually become mandatory—this is potentially one step on the way to self-driving trucks, though if regulators lock into one technological standard, they may prevent future improvements, and therefore harm long-run safety. Tread carefully, NHTSA!
  • An effort to make foreign-born livestock herders feel more at home on the range?
  • New FDA labeling requirements for infant formula will become effective on June 22, 2016.
  • Design standards for highways.

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

Latest Ex-Im Revival Tactic: The Discharge Petition

One of the classic lines from the 1990 novel and 1993 movie Jurassic Park is that “life finds a way.” As with dinosaurs, so with government programs. The Export-Import Bank expired on June 30, and has been in liquidation ever since. But Ex-Im’s supporters may have found a way to bring it back to life. Just as frog DNA implanted in Jurassic Park’s all-female cloned dinosaurs allowed them to reproduce by causing some of them to switch genders, Rep. Stephen Fincher (R-Tenn.), who once opposed Ex-Im, has found a way to get Ex-Im past its own obstacles in the House: a discharge petition.

In the House of Representatives, a bill must typically be approved by a Committee before it moves to a full floor vote before all 435 members. A successful discharge petition circumvents Committees and brings a bill straight to a floor vote, but it is rarely used. The last time a discharge petition succeeded was in 2002—ironically, in Fincher’s case, for the McCain-Feingold campaign finance regulation bill.

Fincher’s re-election campaign has received about 150 donations totaling a little more than $250,000, as of the most recent campaign finance disclosures. Two of those donations come from his home state of Tennessee, totaling $750. As journalist Tim Carney puts it, this “rounds to 0 percent of his money raised.” In total, “More than 99 percent of the money powering Fincher’s re-election bid comes from political action committees (almost all of them corporate PACs) and K Street lobbyist types.” Among those corporate PACs are all of Ex-Im’s biggest beneficiaries, including Boeing, General Electric, and other large firms.

This does not make Rep. Fincher unique. It merely makes him conventional. But so far, his decidedly unconventional political strategy is working. Fincher’s Ex-Im revival bill is being held in purgatory in the House Financial Services Committee, where Chairman Jeb Hensarling is one of Ex-Im’s strongest opponents. Since Hensarling has no intention of moving on Fincher’s bill, Fincher countered with a discharge petition. Nearly all House Democrats joined about 40 Republicans in signing it, giving Fincher the 218 signatures he needs to force a floor vote (here’s the full signatory list from October 9).

Under House rules, the soonest a floor vote can happen is October 26. Then, assuming it passes, Fincher’s Ex-Im bill moves to the Senate.

Since the bill is unlikely to pass the Senate, Fincher’s gambit may not matter too much in the end. But it is appearing likely that an Ex-Im revival will be folded into an upcoming must-pass transportation bill. That opens up a whole new set of negotiations, but Fincher’s cronyist quest may well succeed, even if its path is long and indirect.

Dinosaurs were around for nearly 200 million years. So long as people like Rep. Fincher are in Congress, government agencies can expect similar longevity.

CEI’s Battered Business Bureau: The Week in Regulation

The 2015 Federal Register broke the 60,000-page barrier in a big way, with new rules ranging from tuna boats to Nicaraguan archaeology.

On to the data:

  • Last week, 68 new final regulations were published in the Federal Register, after 76 the previous week.
  • That’s the equivalent of a new regulation every two hours and 28 minutes.
  • So far in 2015, 2,611 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,330 new regulations this year, far fewer than the usual total of 3,500-plus.
  • Last week, 1,245 new pages were added to the Federal Register, after 1,832 pages the previous week.
  • Currently at 61,185 pages, the 2015 Federal Register is on pace for 78,043 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 21 such rules have been published so far this year, none in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations ranges from $1.69 billion to $1.81 billion for the current year.
  • 219 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 427 new rules affect small businesses; 60 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

A Really Slow News Day

Headlines from some of today’s most-read stories at Politico:

Bo Obama turns 7! A look inside the first dog’s fetching life

The GOP Is Throwing Away Millions of Dollars
(trillions is more accurate – ed.)

And one story that would make for a rather speedier news day if the headline was literally true:

Chris Christie returns from the dead

CEI’s Battered Business Bureau: The Week in Regulation

In another busy week, federal agencies issued new regulations for everything from tomato plants to airplane seats.

On to the data:

  • Last week, 76 new final regulations were published in the Federal Register, after 84 the previous week.
  • That’s the equivalent of a new regulation every two hours and 13 minutes.
  • So far in 2015, 2,543 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,329 new regulations this year, far fewer than the usual total of 3,500-plus.
  • Last week, 1,832 new pages were added to the Federal Register, after 1,301 pages the previous week.
  • Currently at 59,940 pages, the 2015 Federal Register is on pace for 78,456 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 21 such rules have been published so far this year, none in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations ranges from $1.69 billion to $1.81 billion for the current year.
  • 213 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 413 new rules affect small businesses; 57 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

OPIC Interview

On September 30, I appeared on The Wall Street Journal‘s OpinionJournal Live with James Freeman to talk about OPIC. It went well, although my cat Murky makes a surprise cameo near the end of the segment. Such are the perils of working from home.

Here’s the link.